The Remortgage Conundrum: Why Doing Something is Better Than Nothing

I've seen the UK mortgage market go through many changes. But the current state of the remortgage market is particularly intriguing. With affordability under pressure from inflation and rising interest rates, many homeowners are facing difficult decisions.

However, one thing is clear: doing something is better than doing nothing.

The State of the Remortgage Market

According to UK Finance, the mortgage market is predicted to soften in 2023. The cost-of-living pressures and a rising interest rate environment are expected to increase the pressure on new mortgage affordability, reducing effective demand for new house purchase mortgages.

Remortgage activity, however, is predicted to increase in 2023 as over 1 million fixed-rate mortgages come to the end of their initial term. But the same affordability pressures facing prospective new borrowers will also impact remortgaging. Some homeowners, particularly those in lower income brackets, may find remortgaging options more limited on the open market.

The Importance of Taking Action

In the face of these challenges, it's easy to feel overwhelmed and do nothing. But doing nothing could leave you on your lender's standard variable rate (SVR), which is typically much higher than the rates available on new deals. The average SVR is currently over 7%. This could mean paying hundreds, if not thousands, of pounds more each year.

Instead, consider speaking with an independent mortgage broker. They can provide personalised advice based on your circumstances and help you to make difficult choices. They have access to a wide range of mortgage products, including those not available on the high street, and can help you find a deal that suits your needs.

Planning Ahead: The Key to Navigating the Remortgage Market

Planning ahead is important in the current remortgage market. Here's why:

1. Avoiding the SVR: If your fixed-rate deal is coming to an end, start looking at remortgage deals a few months in advance. This will give you enough time to find a new deal and avoid being moved onto your lender's SVR.
2. Locking in a lower rate: With interest rates predicted to rise, remortgaging now could allow you to lock in a competitive rate, potentially saving you money in the long term.
3. Budgeting for higher repayments: If you're unable to find a deal with a lower interest rate, planning ahead will give you time to adjust your budget to accommodate higher mortgage repayments.
4. Considering your options: A mortgage broker can help you explore different mortgage options, such as fixed-rate, tracker, or offset mortgages, and find the one that's right for you. You may even need to change your mortgage setup to make it more affordable.

Tips for Navigating the Remortgage Market

Here are some tips to help you navigate the remortgage market:

1. Check your credit score: A good credit score can give you access to the best mortgage deals. Check your score in advance and take steps to improve it if necessary.
2. Understand the costs: Remortgaging can involve costs such as valuation fees, legal fees, and early repayment charges. Make sure you understand these costs and factor them into your decision.
3. Consider the term: Extending the term of your mortgage can lower your monthly repayments, but it will increase the total amount you repay. On the other hand, reducing the term can save you money in the long run but will increase your monthly repayments.
4. Get advice: An independent mortgage broker can provide valuable advice and help you navigate the remortgage market. They can also handle the application process for you, saving you time and stress.

While the current remortgage market may be frustrating, with its own challenges, its important to take charge of your mortgage. By taking action, planning ahead, and seeking professional advice, you can work through these challenges.

Remember, the goal is not just to get a new mortgage deal, but to get a deal that suits your needs and circumstances. So, don't just do something—do the right thing. Speak to a mortgage broker, explore your options, and make an informed decision.